Sherman Oaks, California /Cleeland — Signature Group Holdings, Inc. has announced that it has entered into a definitive stock purchase agreement to acquire the Global Recycling and Specification Alloys (GRSA) business of privately-held Aleris Corporation for $525 million. The Board of Directors of Signature unanimously approved the proposed transaction. The transaction is subject to customary closing conditions, including regulatory approvals and clearance under the Hart-Scott Rodino Antitrust Improvements Act.
This marks the entry of Signature into the resurgent aluminum market in North America and Europe. GRSA, the largest independent aluminum recycler in the world, is positioned to take advantage of improving fundamentals reshaping global aluminum markets. Sectors such as automotive, aerospace, packaging, building and construction are all experiencing increased aluminum consumption. The automotive sector, in particular, is consuming more aluminum as government mandates require reduced carbon emissions and compel auto manufacturers to increase fuel efficiency.
A large, accretive, well-valued acquisition
„This deal is transformative for Signature in an industry I know well,“ said Craig Bouchard, Chairman and Chief Executive Officer of Signature. „GRSA is the low-cost producer and clear market leader on two continents, with strong growth prospects and a sustainable competitive advantage. We are particularly pleased to inherit a blue chip customer base. This transaction fulfills a promise made to our stockholders to seek large, accretive, well-valued acquisitions. It is an important step as we continue to build Signature into a significant and profitable company.“
Signature expects to name Terry Hogan, currently senior vice president and leader of Aleris‘ Recycling and Specification Alloys business in North America, as president of the GRSA business effective upon closing the acquisition. Russell Barr, vice president and leader of Aleris‘ recycling business in Europe is expected to serve as executive vice president, Europe. „Terry and Russell are excellent managers and leaders with a strong team that is scalable to a larger platform,“ stated Bouchard.
Adjusted EBITDA: $74.9 million
Global recycled aluminum consumption is projected to grow 6.7 percent a year over the next decade, compared to primary aluminum consumption at 4.5 percent, according to Freedonia Group.
GRSA is the global market leader in aluminum recycling, converting aluminum scrap and dross into usable metal and specification alloys in molten, ingot and other forms. For the twelve-month period ended June 30, 2014, Aleris reports that GRSA’s earnings before interest, taxes, depreciation and amortization, on an adjusted, stand-alone basis („Adjusted EBITDA“) were $74.9 million. Also reported by Aleris, GRSA’s Adjusted EBITDA during the quarter ended September 30, 2014 is expected to be $4.6 million to $7.6 million higher than the Adjusted EBITDA in the quarter ended September 30, 2013. GRSA’s third quarter 2014 results are estimates and subject to changes based on Aleris management’s final review of financial results during the period.
Approximately 65 percent of GRSA’s business is conducted in North America, with 35 percent in Europe. GRSA operates a total of twenty-four facilities across six countries.
More details of the transaction can be fond under signaturegroupholdings.com
Source: Signature Group Holdings, Inc. / PRNewswire